NOTICES
DEPARTMENT OF COMMERCE
Preliminary Affirmative Countervailing Duty Determinations, Certain Steel
Products From France
Thursday, June 17, 1982
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AGENCY: International Trade Administration, Commerce.
ACTION: Preliminary affirmative countervailing duty determinations.
SUMMARY: We preliminarily determine certain benefits which constitute subsidies
within the meaning of the countervailing duty law are being provided to
manufacturers, producers, or exporters in France of certain steel products, as described
in the "Scope of the Investigations" section of this notice. The estimated net subsidy for
each firm is indicated in the "Suspension of Liquidation" section of this notice. Therefore,
we are directing the U.S. Customs Service to suspend liquidation of all entries of the
products subject to these determinations which are entered, or withdrawn from
warehouse, for consumption, and to require a cash deposit or bond on these products in
the amount equal to the estimated net subsidy. If these investigations proceed normally,
we will make our final determinations by August 24, 1982.
EFFECTIVE DATE: June 17, 1982.
FOR FURTHER INFORMATION CONTACT:
Nicholas C. Tolerico, Office of Investigations, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and Constitution
Avenue, NW., Washington, D.C. 20230, telephone: 202-377-4036.
SUPPLEMENTARY INFORMATION:
Preliminary Determinations
Based upon our investigations, we preliminarily determine there is reason to believe or
suspect certain benefits which constitute subsidies within the meaning of section 701 of
the Tariff Act of 1930, as amended ("the Act"), are being provided to manufacturers,
producers, or exporters in France of certain steel products, as described in the "Scope of
the Investigations" section of this notice. For purposes of these investigations the
following programs are preliminarily found to be subsidies:
Export credit insurance.
Preferential financing including equity infusions.
Regional development incentives.
Certain labor-related aid.
Assistance for plant operating expenses.
Research and development.
We estimate the net subsidy to be the amount indicated for each firm in the "Suspension of
Liquidation" section of this notice.
Case History
On January 11, 1982 we received petitions from the United States Steel Corporation;
counsel for Bethlehem Steel Corporation; and counsel for Republic Steel Corporation,
Inland Steel Company, Jones & Laughling Steel. Inc., National Steel Corporation, and
Cyclops Corporation ("the Five"), filed on behalf of the U.S. industry producing carbon
steel structural shapes, hot- rolled carbon steel sheet and strip and cold-rolled carbon
steel sheet and strip. The petitions alleged that certain benefits which constitute subsidies
within the meaning of section 701 of the Act are being provided, directly or indirectly, to
the manufacturers, producers, or exporters in France of the steel products listed above.
Counsel for Bethlehem Steel Corporation and counsel for the Five also alleged that
"critical circumstances" exist, as defined in section 703(e) of the Act.
We found the petitions to contain sufficient grounds upon which to initiate
countervailing duty investigations, and on February 1, 1982, we initiated
countervailing duty investigations (47 Fed. Reg. 5739). We stated that we expected to
issue preliminary determinations by April 6, 1982. We subsequently determined that the
investigations are "extraordinarily complicated", as defined in section 703(c) of the Act,
and postponed our preliminary determinations for 65 days until June 10, 1982 (47 FR
11738).
Since France is a "country under the Agreement" within the meaning of section 701(b) of
the Act, injury determinations are required for these investigations. Therefore, we
notified the U.S. International Trade Commission ("ITC") of our initiations. On February
26, 1982, the ITC preliminarily determined that there is a reasonable indication that these
imports are materially injuring a U.S. industry.
We presented questionnaires concerning the allegations to the Delegation of the
Commission of the European Communities and to the government of France at its
embassy in Washington, D.C. On April 28 and 30, 1982 we received the responses to the
questionnaires. Supplemental responses were received on May 14 and 17, 1982.
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Scope of the Investigations
The products covered by these investigations are:
Carbon steel structural shapes
Hot-rolled carbon steel sheet and strip
Cold-rolled carbon steel sheet and strip
The products are fully described in Appendix A which appears with the notice of
"Preliminary Affirmative Countervailing Duty Determinations, Certain Steel Products
from Belgium", in this issue of the Federal Register (the product definition of hot-rolled
carbon steel sheet and strip has been amended since the initiation of these investigations
(47 FR 5739)).
Societe des Acieries et Laminoirs de Lorraine ("Sacilor"), Societe Metallurgique de
Normandie ("Normandie"), and Union Siderurgigue dr Nord et de l'Est de la France
("Usinor") are the only known producers and exporters in France of the subject products
which were exported to the United States. The period for which we are measuring
subsidization is the 1981 calendar year.
Analysis of Programs
In their responses, the government of France and the Delegation of the Commission of
the European Communities provided data for the applicable periods. Additionally, we
received information from Sacilor and Usinor, which produced and exported to the U.S.
in 1981 carbon steel structural shapes and hot- and cold-rolled carbon steel sheet and
strip. Responses for Societe Lorraine de Laminage Continu ("Sollac"), of which Sacilor
owns 64.29 percent, and Societe Lorraine et Meridionale de Laminage Continu ("Solmer"),
of which Sollac owns 47.5 percent, have been incorporated into Sacilor's response.
Normandie did not submit a response to the questionnaire.
Throughout this notice, general principles applied by the Department of Commerce to the
facts of the current investigations concerning certain steel products are described in
detail in Appendix B, which appears with the notice of "Preliminary Affirmative
Countervailing Duty Determinations, Certain Steel Products from Belgium", in this
issue of the Federal Register (hereinafter, Appendix B). Appendix C, which also appears
with the above cited Belgium Federal Register notice, is a description of programs
administered by organizations of the European Communities ("EC") (hereinafter,
Appendix C). Based upon our analysis to date of the petitions and responses to our
questionnaires, we preliminarily determine the following.
I. Programs Preliminarily Determined To Be Subsidies
We preliminarily determine subsidies are being provided to manufacturers, producers, or
exporters in France of carbon steel structural shapes, hot-rolled carbon steel sheet and
strip and cold-rolled carbon steel sheet and strip under the programs listed below.
A. Export Credit Insurance
The Compagnie Francaise d'Assurance pour le Commerce Exterieur ("COFACE") is a
government corporation that provides export insurance to cover commercial, political,
exchange rate fluctuation and inflation risks. In reviewing the 1980 annual report (the
most recent report available) we found that, while the company showed an overall profit,
its insurance activities operated at a deficit. Revenues from financial and real estate
investments allowed COFACE to offset the operating deficit on insurance. Our preliminary
review of the annual reports for 1976-1979 revealed a pattern of yearly operating deficits
on insurance activities that were offset by revenues from investments. This pattern of
operating deficits on insurance activities indicates that COFACE does not charge
premiums sufficient to cover long-term operating costs and losses. This is an export
subsidy within the meaning of the countervailing duty law.
Based on the information currently available, Usinor is the only company in these
investigations insuring its exports to the U.S. through COFACE. A portion of Usinor's U.S.
accounts receivable is insured against commercial risk. From data contained in COFACE's
1980 profit and loss statement, we calculated the 1980 operating deficit on COFACE's
insurance activities as a percentage of net premiums received. By applying this
percentage to the premiums paid by Usinor in 1980, we calculated the total benefit to
Usinor on insured exports to the U.S. We then allocated the benefit received by Usinor
over the value of their insured U.S. accounts receivable for 1980 and found a subsidy of
0.078 percent ad valorem on exports to the United States of the products under
investigation. We used this 1980-based figure as the best available information for the
value of this subsidy to Usinor in 1981.
B. Preferential Financing Including Equity Infusions
Petitioners alleged preferential financing in the form of low-interest loans and loan
guarantees, and the conversion of accumulated debt.
A number of French government and EC organizations have issued loans and/or loan
guarantees to the French steel industry. The majority of these loans were provided by the
following institutions:
Fonds de Developpement Economique et Social ("FDES").
Created by Parliament in 1955, FDES lends funds to government-owned and privately
held corporations for industrial development or relocation of facilities to further the
government's regional development objectives. Loan applications are filed with the
Ministry of the Economy and Finance, but the decision to issue a loan rests with the FDES
Board, which is composed of government ministers whose agencies are involved in
economic policy. Usually, loans are secured by a mortgage or a pledge. The source of
FDES loan funds is a line item in the national budget. Because FDES provides loans on a
regional basis, we consider these loans to be subsidies within the meaning of the
countervailing duty law.
Credit National.
Credit National is a government credit institution with special legal status, which issues
loans to French industry, particularly the steel industry. Loan funds are raised by offering
bonds in the public marketplace. Credit National also acted as the conduit through which
FDES loans were granted to the steel industry. In addition, the French government, either
directly or through Credit National, guarantees some loans to the steel companies. Until
1979, a yearly guarantee fee averaging 0.5 percent of the principal was paid by the
company receiving loan guarantee. The current charge is 0.25 percent of the principal of
the loan. Because Credit National loans and loan guarantees are industry-specific, they
are considered to be subsidies within the meaning of the countervailing duty law.
European Coal and Steel Community ("ECSC") and European Investment Bank ("EIB")
Loans and Loan Guarantees.
A description of ECSC and EIB loans and loan guarantees, and the reasons we consider
them countervailable, are presented in Appendix C.
Both Sacilor and Usinor received loans and loan guarantees through these institutions.
Our treatment of these loans and loan guarantees is outlined in parts (1) through (4)
below.
Additionally, the Groupement de l'Industrie Siderurgique ("GIS") and other specialized
financial institutions have issued loans to the French steel
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industry. Because of
events described below, the question of whether these loans originally conferred a
countervailable benefit does not need to be addressed. Our treatment of them is discussed
in parts (3) and (4).
Groupement de l'Industrie Siderurgique (GIS).
GIS was founded in 1946 as a corporation whose sole shareholders were 45 steel
companies. The purpose of GIS was to raise money for capital projects of the steel
companies. By floating debt instruments in the public marketplace, GIS raised monies to
lend to the companies at a rate equal to the rate being paid on bonds issued to the public,
plus operating expenses. Five percent of the funds received were left on deposit with GIS
to cover individual steel company defaults. Funds were raised in France, other EC
countries, and abroad. GIS bonds are backed by unconditional guarantees of the
companies, with each company being liable to the bondholders for the sums loaned to it
by GIS. No loans have been issued by GIS since 1978.
Specialized Financial Institutions.
A number of financial institutions were created after World War II to raise capital for
various sectors of French industry. By floating bond issues, these institutions raised
capital and made loans to various companies, including steel companies. Since 1978,
none of these institutions has floated bonds or loaned funds to the steel industry. These
institutions included:'
--Groupement Interprofessionnel Financier Antipollution ("BIFIAP"): Environment
protection;
--Groupement pour le Financement de la Region de Fos ("GIFOS"): Development of the Fos
area near Marseille;
--Groupement des Industries de Materiaux de Construction ("GIMAT"): Construction
materials;
--Groupement pour le Financement des Economies d'Energie ("GENERCO"): Energy
conservation;
--Groupement d'Equipement pour le Traitement des Minerais de Fer ("GETRAFER"):
Processing of iron ore.
For a number of years, the French steel industry has been experiencing financial
difficulties. Petitioners alleged that both Sacilor and Usinor are uncreditworthy. Based on
information in the responses and subsequent submissions, and our analysis of each
company's financial statements, we have concluded that by the end of 1975, both Sacilor
and Usinor were uncreditworthy. In a supplemental submission to its response, Usinor
included an evaluation of its financial situation. This evaluation paraphrases a speech by
the President of Usinor stating that "* * * indeed, the financial results which were already
qualified as disastrous at the end of fiscal 1975 further seriously deteriorated during the
second half of 1977, thus cornering Usinor in a dramatic situation." Our review of Usinor's
financial statements revealed significant operating losses in each year since 1975.
Between 1976 and 1980 (the most recent year for which an annual report was available),
Usinor's operating losses ranged from a low of FF 833 million in 1979 to a high of FF 2.6
billion in 1977. Coupled with the operating losses, Usinor has consistently experienced
high debt/equity ratios which in this case indicate an uncreditworthy situation.
Sacilor has also recorded significant operating losses since 1975 (from a low of FF 1.1
billion in 1979 to a high of FF 2.4 billion in 1977), and has had increasingly high
debt/equity ratios in each year since 1975. Therefore, Sacilor's financial position can also
be considered uncreditworthy. Although both companies have received loans from
commercial sources since 1975, the majority of commercial banking institutions in
France have been nationalized since the late 1940s. Consequently, it would be difficult to
consider these loans as conclusive proof of the creditworthiness of the companies.
Beginning in 1978, the government of France instituted a major recapitalization and
restructuring program for the steel industry, hereinafter referred to as the "Rescue Plan".
Under this plan, the government converted loans made by the institutions identified
above, as well as loans from other sources, into Loans of Special Characteristics (Prets a
Caracteristiques Speciales or "PACS"). The government also granted new loans and loan
guarantees through FDES, Credit National and other governmental agencies.
Additionally, the government made a series of equity infusions in Sacilor and Usinor
through which it became a shareholder in both companies.
Preferential loans and loan guarantees, PACS, and equity infusions have been treated in
the following four ways:
1. Preferential Loans and Loan Guarantees Issued Prior to the End of 1975. The subsidy
rates for loans and loan guarantees from FDES, Credit National and EIB that were made
prior to the end of 1975 for which principal was still outstanding in 1981, and which were
made at rates below the commercial benchmark for a comparable loan in the year it was
issued, are calculated according to the general methodology for loans and loan
guarantees outlined in Appendix B. For France we used as the commercial benchmark
the average annual yield to maturity of newly issued corporate bonds on the Paris
securities market. Using the method outlined in Appendix B, we computed a subsidy of
0.036 percent ad valorem for Sacilor and 0.140 percent ad valorem for Usinor.
2. Preferential Loans and Loan Guarantees Made After 1975. Because we consider Sacilor
and Usinor as uncreditworthy after 1975, loans and loan guarantees issued since then by
French government organizations, the ECSC, and the EIB, with principal still outstanding
during 1981, are treated as loans to companies considered to be uncreditworthy. To
prevent countervailing a higher amount than if the loan had been an outright grant to the
company, we compared the 1981 benefit of these loans under the equity methodology
used for loans to uncreditworthy companies, with the result under the grant methodology
described in Appendix B. We then calculated a subsidy of 9.767 percent ad valorem for
Sacilor and 4.953 percent ad valorem for Usinor.
3. Loans and Loan Guarantees Converted into Loans of Special Characteristics (PACS). By
1978, the debt of Sacilor and Usinor to FDES, Credit National, the ECSC, the EIB, the GIS,
specialized financial institutions such as GIFIAP, and banks had become exceedingly
large. The companies, stockholders, government and other creditors agreed that the
burden of servicing this debt must be reduced. The result was the "Rescue Plan" described
above.
Most of the debt owed by each company to government agencies and specialized financial
institutions was converted into PACS, which carry an interest rate of 0.1 percent, with no
obligation to repay principal unless the companies become profitable again. In addition
to the initial 1978 conversions, PACS were also issued to both companies between 1978
and 1981. The benefits of these PACS were calculated using the equity methodology for
loans to uncreditworthy companies outlined in Appendix B. Without exceeding the
subsidy amount had these PACS been grants, we calculated a subsidy of 7.517 percent ad
valorem for Sacilor and 8.064 percent ad valorem for Usinor. In calculating the benefit of
the loans that were converted into PACS, we did not include those PACS that were
subsequently cancelled in exchange for
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stock. These are discussed in part (4) below.
4. Equity Infusions. Between 1978 and 1981, the government of France made the
following equity infusons in Sacilor and Usinor:
investment of capital in both companies in exchange for shares of their stock,
advances of capital to Sacilor in 1979 and 1981, and
cancellation of PACS at the end of 1981 in exchange for additional shares.
At the end of this period, the government's share of ownership in each company reached
approximately 90 percent. As stated above, both Sacilor and Usinor have recorded
significant and persistent losses in each year since 1975, ranging from FF 1.1 billion to FF
2.4 billion for Sacilor and from FF 833 million to FF 2.6 billion for Usinor. Therefore, it is
doubtful that the government's equity infusions were consistent with commercial
considerations.
Since both Sacilor's and Usinor's stock was traded on the Paris Bourse during the time
span covering the government's equity infusions (see equity section in Appendix B), we
calculated average stock prices for the period preceding each of the government's
actions. We then compared the market value of the new stock issued to the government
with the actual value to the company of the government's equity infusions. If the actual
value was greater than the market value, we found the difference to be a grant and
amortized it over the average useful life of capital assets (see grants section in Appendix
B). We then computed a subsidy of 10.372 percent ad valorem for Sacilor and 6.180
percent ad valorem for Usinor.
Under the Rescue Plan, Usinor also received refunds for interest on loans that were not
converted into PACS. Because this interest was refunded, it was not captured in our
calculations on loans and loan guarantees in parts (1) and (2) above. These refunds are
grants to specific companies and are therefore countervailable. The 1981 benefit of these
grants was calculated according to the grant methodology outlined in Appendix B, using
the average useful life of capital assets. By allocating the 1981 benefit over the total value
of Usinor's 1981 steel production, we found a subsidy of 0.202 percent ad valorem. There
is evidence that Sacilor also received this type of assistance under the Rescue Plan;
however, we were not supplied with the exact amounts received by Sacilor. Therefore, we
used Usinor's 1981 benefit as the best information available to calculate Sacilor's subsidy
of 0.254 percent ad valorem.
C. Regional Development Incentives
The government of France provides a series of tax and non-tax regional incentives to
French and foreign businesses to establish new, or to expand existing, businesses in
certain French regions. The Delegation a l'Amenagement du Territoire et a l'Action
Regionale ("DATAR") coordinates the programs of various government agencies and
ministries. For incentive purposes, France is divided into four zones. Each zone, or part
of a zone, is eligible for different types or levels of assistance. The assistance includes
development grants, non-industrial grants, research and development grants,
decentralization indemnities, and job training subsidies. Job training assistance is
provided through individual agreements with the Fonds National de l'Emploi ("FNE").
These agreements are available to reimburse training expenses for establishing facilities
in certain zones and for converting declining facilities.
We consider the regional incentives provided through these programs to be subsidies
within the meaning of the U.S. countervailing duty law because each zone is eligible
for only certain types of assistance.
Based on information currently available, the only regional incentive program utilized
during 1981 was labor assistance provided through FNE and AFOREST, a regional training
organization. The benefits received by Sacilor and Usinor from these labor assistance
programs are outlined below.
1. Sacilor. Sacilor received grants from FNE and AFOREST for relocation and moving
costs, and for worker training and retraining. We were not informed as to the types of jobs
for which workers were retrained. For purposes of these preliminary determinations, we
assume they were for jobs within the steel industry. Therefore, we consider them to be
subsidies. We are seeking additional information as to the types of jobs for which workers
were retrained.
The ECSC contributed a portion of the FNE grants to Sacilor. That portion, where known,
has been factored out of the allocation of net benefits received in 1981 by Sacilor. (For a
discussion of ECSC grants for labor assistance, see Appendix C).
By allocating the payments received by Sacilor from FNE and AFOREST in 1981 over total
value of steel production, as specified in Appendix B, we calculated a subsidy of 0.078
percent ad valorem.
2. Usinor. We have no indication that Usinor received FNE funds during 1981 under
regional incentive programs. We are seeking further information on Usinor's possible use
of these regional development incentives.
In 1980, Sacilor also received an ECSC loan for relocating employees to Solmer's plant at
Fos. Since this ECSC loan was not financed from producer- generated funds (see Appendix
C), and since this loan was provided for the relocation of workers within the steel
industry, we consider it to be countervailable. Because the loan was awarded after 1975,
the year in which we concluded Sacilor became uncreditworthy, we have treated the
entire amount as a loan to an uncreditworthy company, as described in Appendix B. The
benefit of this loan was calculated using the equity methodology for loans to
uncreditworthy companies outlined in Appendix B. Without exceeding the subsidy
amount had this loan been a grant, we found an ad valorem subsidy for this benefit of
0.00184 percent.
D. Certain Labor-Related Aid
French corporations have statutory and contractual obligations to their employees in
case of interruption or cessation of employment. Under the Rescue Plan for the steel
industry, the government reimbursed Sacilor and Usinor for compensating laid-off
workers and implementing early and voluntary retirement programs. Because this
assistance relieves the steel companies on a preferential basis of labor-related obligations
under the law, it is a subsidy. At this time, we are not fully aware of the extent or duration
of the companies' responsibilities under the law. We are seeking more complete
information on the companies' legal obligations. The unique circumstances of the
individual companies are addressed below.
1. Usinor. Under the Convention de Protection Sociale of June 1977 and the Convention
Generale de Protection Sociale of July 1979 (social welfare protection agreements),
Usinor paid indemnities to workers in cases of early retirement and layoffs. The
government made direct payments to the laid-off or retired workers. These payments
covered both the employer's and the wage- earners' dues paid in to the Retirement
Compensation and Unemployment Compensation Funds. The government's payment to
the workers of the employer's share of dues implies exoneration of Usinor's legal
obligation for fund contributions, which companies generally are required to pay.
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Therefore, we consider that portion of the government's payments to workers
that constitutes Usinor's share to be countervailable.
Since we were not supplied with the exact amount of Usinor's share, the countervailable
benefit is the total amount received in 1981 for laid-off workers who were placed in early
retirement. This benefit is considered to be a grant to the company and is calculated
according to the methodology in Appendix B for grants of less than one percent of
production value that are used for items normally expensed in one year. We find the
subsidy to be 0.444 percent ad valorem.
2. Sacilor. Under the agreement concluded between Sacilor and the government, Sacilor
disburses the funds to the workers and is then reimbursed by the government. We
considered this reimbursement to be a grant to the company. Because the reimbursement
was greater than one percent of the total value of 1981 steel production, but was not tied
to capital assets, we calculated the subsidy by amortizing the grant over five years. We
amortized the grant over five years because the French government's expectation in 1978
was that it would take the companies targeted by the Rescue Plan five years to return to
profitability. We then allocated the 1981 benefit over the total value of Sacilor's 1981 steel
production and calculated a subsidy of 1.998 percent ad valorem.
Labor-related aid was also provided to Sacilor and Usinor by the ECSC. Both companies
were allocated loans for the housing of workers. Based on current information, it appears
that Sacilor received the entire loan which it then passed on to its employees; on the
other hand, Usinor indicated that its employees receive the loans directly from the ECSC.
Our reasons for determining that the ECSC assistance for worker housing loans constitutes
a subsidy are presented in Appendix C. Although Sacilor received a loan in 1981 for
employee housing, the monies actually passed on to its employees were less than one
percent of the loan amount.
As we do not know the percentage of the ECSC's 1981 budget financed by borrowings (see
Appendix C), we applied the 1980 percentage to the 1981 loans in order to derive that
portion of ECSC housing loan that is countervailable. That loan is then treated as a loan to
an uncreditworthy company because it was made after 1975, which is the year we
concluded the firm became uncreditworthy. The benefit of this loan was calculated using
the equity methodology for loans to uncreditworthy companies outlined in Appendix B.
Without exceeding the subsidy amount had this loan been a grant, we divided the 1981
benefit by the total value of steel production, and found a subsidy of 0.0047 percent ad
valorem.
At this time, we have insufficient information to calculate a subsidy on ECSC worker
housing loans to Usinor. We will seek additional information on ECSC worker housing
loans as they apply to Usinor.
E. Assistance for Plant Operating Expenses
Under the restructuring plan, three of Usinor's plants were scheduled to be shut down. In
1980 and 1981, the French government made payments to Usinor in order to postpone
the closings. The government payments reimbursed Usinor for certain of the expenses
incurred as a result of the government's postponing the closings. Two of the plants have
since been completely closed and the third shut down its steel melting operations. The
monies received constitute a countervailable grant to Usinor because the plants
continued to produce steel. Because the payments from the government reimbursed
operating expenses, we are allocating the benefits to the year in which the payments were
received, as explained in Appendix B. According to this method, we found a subsidy of
0.036 percent ad valorem on the total value of Usinor's 1981 steel production.
F. Research and Development ("R&D")
Research and development directed at the French steel industry is provided through the
Institut de Recherches de la Siderurgie Francaise ("IRSID"). IRSID was established by the
French steel companies, and they underwrite a major portion of IRSID's budget.
However, the government contributes at least three percent of IRSID's yearly budget.
Because IRSID's research is industry- specific and because there is no evidence at this
time that the results of the research are publicly available, we find that portion of IRSID's
budget funded by the government to be countervailable. However, we have insufficient
information both on IRSID's budget and on R&D assistance that may have been provided
to the companies on the products under investigation to calculate an ad valorem subsidy
rate. We have asked for additional information regarding IRSID.
II. Programs Preliminarily Determined Not To Be Subsidies
We preliminarily determine subsidies are not being provided to manufacturers,
producers, or exporters in France of carbon steel structural shapes, hot-rolled carbon
steel sheet and strip and cold-rolled carbon steel sheet and strip, under the following
programs.
A. Assistance on Purchase of Land and Tax Exemptions
Petitioners alleged that Solmer (Sacilor) purchased the land for its Fos plant at reduced
prices, and received exemptions from value-added taxes on the purchase of the land and
equipment. The Fos industrial complex was developed by the Marseille Port Authority
and is part of Europort South. Besides Solmer (Sacilor), a number of other companies are
located at Fos. Based on the evidence currently available, it appears that Solmer (Sacilor)
purchased the land at Fos at a price competitive with other parcels of land in the area and
at the then current market rate. However, we will seek further information on the land
purchase.
Regarding tax exemptions, our information indicates that Solmer (Sacilor) did not benefit
from any value-added tax advantages on the purchase of land and equipment not
available to all manufacturers constructing new plants. As with the alleged assistance to
Sacilor for purchase of land at Fos, we will seek further clarification of these tax
provisions.
B. Funding for Infrastructure
Allegations were made in the petitions that the French government provided funding for
infrastructure such as road, port, rail and communication facilities, at Usinor's Dunkirk
plant and Solmer's (Sacilor) Fos plant. Regarding the Dunkirk facilities, we have received
information that Usinor paid the French government for constructing and improving the
infrastructure. At Fos, Sacilor's plant is only one of a number of companies located there,
all of which share port, road, rail and communication facilities. Since we have no evidence
that these facilities exclusively benefit the Sacilor plant, we preliminarily determine that
no subsidy exists. However, we will seek additional information as to whether or not the
French government funded any facilities at Dunkirk or Fos that are exclusively used by
Sacilor and Usinor.
C. Assistance to Coal Suppliers
The government of France, which directly or indirectly owns all French coal producers,
makes available to Charbonnages de France ("CDF") such assistance as may be necessary
to equalize the selling price of coal
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produced in France with the world market
price for each type of coal. Even though the French coal industry appears to be
subsidized, we do not consider this assistance to confer a countervailable benefit on the
French steel industry for the following reasons. The apparently subsidized coal
companies are unrelated to the steel companies, and their coal transactions are
conducted at arm's length. Moreover, the French steel companies purchase coal at similar
or even lower prices without regard to French government assistance to the coal
industry. Over 75 percent of the French steel industry's coal requirements during 1981
were supplied by non-French sources, including the United States, which accounted for
25 percent of all coking coal and coke utilized.
With regard to allegations that Sacilor and Usinor indirectly benefited from German
federal and state assistance to coal producers, refer to Appendix B.
ECSC provides various production and marketing grants to EC coal and coke producers;
however, we do not consider this assistance to confer a countervailable benefit on the
French steel industry for the reasons given in Appendix C.
D. ECSC Labor Assistance
Under Article 56 of the Treaty of Paris, the ECSC makes two forms of assistance available
to companies for the benefit of steel workers: (a) Industrial reconversion loans, and (b)
rehabilitation aid. Both of these programs, and the reasons why they are not considered
countervailable, are discussed in Appendix C. Both Sacilor and Usinor received such ECSC
labor assistance.
E. Research and Development Grants From the ECSC
This program, and the reasons why it is not considered countervailable, are described in
Appendix C. At this time, we have no evidence that Sacilor or Usinor received R&D grants
from the ECSC.
III. Programs Preliminarily Determined Not To Be Utilized
We preliminarily determine that the following programs which were described in the
notice of "Initiation of Countervailing Duty Investigations" are not utilized by the
manufacturers, producers, exporters in France of carbon steel structural shapes,
hot-rolled carbon steel sheet and strip, and cold-rolled carbon steel sheet and strip.
A. Export Financing
In France, exports may be financed or guaranteed through the Commission
Interministerielle des Garanties et du Credit au Commerce Exterieur and the Banque
Francaise du Commerce Exterieur ("BFCE"). At this time, we have no evidence that Sacilor
and Usinor availed themselves of any of these programs.
B. Special Fund for Industrial Adaptation
Petitioners alleged that French steel companies received grants and preferential loans
through the Fonds special d'Adaptation Industrielle ("FSAI"). FSAI was established in
1978 to promote job creation and industrial diversification in the steel, textile,
shipbuilding and coal regions of France. At this time, we have no evidence that the
respondents received benefits from FSAI.
C. Loan Guarantees From the ECSC
At this time, we have found no evidence that ECSC loan guarantees, as described in
Appendix C, were provided to the French steel companies under investigation.
D. European Regional Development Funds ("ERDF")
This program is explained in Appendix C. Our preliminary analysis leads us to conclude
that no company under investigation receives ERDF funds.
IV. Programs for Which Additional Information Is Needed
The programs listed below were alleged by the petitioners to be subsidies. At this time, we
do not have sufficient information upon which to determine whether these programs are
providing manufacturers, producers, or exporters in France of carbon steel structural
shapes, hot-rolled carbon steel sheet and strip and cold-rolled carbon steel sheet and
strip, benefits which consitute subsidies within the meaning of the countervailing duty
law. We will seek additional information regarding these programs before reaching final
determinations.
A. Research and Development Assistance
Three government organizations provided a small amount of R&D funding to Sacilor and
Usinor: (1) Agence Nationale de Valorisation de la Recherche (ANVAR); (2) Direction
Generale de la Recherche Scientifique et Technique (DGRST); and (3) Agence pour
l'Informatique. We are seeking additional information because we are not aware of
whether these programs are industry- or sector-specific, and whether the results of this
assistance are publicly available (see Appendix B).
B. Energy Assistance
Both Sacilor and Usinor received a few small grants from the Agence pour les Economies
d'Energie ("AEE"). The AEE is a government agency, created in 1974, that provides grants
to foster energy efficiency. Grants received from the agency may have to be repaid if
target efficiency levels are not met. Because of the absence of evidence that this
organization provides benefits on other than a country-wide basis, we need additional
information before making a determination.
C. Regional Development/Regional Anti-Pollution Agencies
Created by Law No. 64-1245 of 1964, these regional agencies provide incentives for the
installation of anti-pollution devices. The agencies collect dues for their operation and in
return award "bonuses" and loans to combat pollution. Usinor has received a number of
small loans from these agencies with outstanding principal due during 1981.
Due to insufficient information both on the availability of this assistance within and across
regions, and on the operating income and expenses of these agencies, we are unable to
determine if the loans received by Usinor are countervailable at this time.
In addition, Usinor's response contained information on a few small grants received from
regional and national agencies, such as Agence du Bassin Artois- Picardie and Agence
Nationale pour l'Amelioration des Conditions de Travail, about which we have insufficient
information to make determinations.
D. French Government Assistance to Iron Ore Suppliers
In its response, the government of France stated that neither it nor any
government-controlled institution has provided assistance to French iron ore producers.
Sacilor and Usinor also indicated that no aid was supplied. As quoted from the
questionnaire responses:
(Sacilor) "Lormines has not received any grants or other aids from the Government of
France. Aside from Lormines, Sacilor purchases rich iron ore from unrelated Swedish
suppliers at world market prices."
"Sollac purchases iron ore from Lormines pursuant to a long term contract entered into in
1977."
*26321
"Solmer purchases all its iron ore from unrelated suppliers at world market
prices."
(Usinor) "To the best of Usinor's knowledge, no assistance is provided to any . . . iron ore
supplier to Usinor's steel production in which Usinor has a common ownership interest."
The respondents claim that French or foreign corporations may purchase iron ore from
French producers at the same price as the French steel producers, but do not state at
what price. We will seek additional information as to whether government assistance is
provided to the French steel industry through French iron ore suppliers.
E. Caisse des Depots et Consignations ("CDC")
CDC is a government agency that invests funds deposited in the Caisses d'Epargne (the
French savings banks). CDC makes both short- and long-term loans to various industries,
including steel. Any loans made by CDC to the respondents after 1975 that were
converted into PACS or cancelled have been included in parts (2), (3), and (4) of the
preferential financing section. For CDC loans made prior to the end of 1975 with principal
still outstanding during 1981, we will seek additional information as to whether or not
they were given to the French steel industry on a preferential basis.
F. Research and Development Loans From the ECSC
In its response, Usinor indicated that it had received an ECSC research and development
loan. At this time we have insufficient information, both on the ECSC loans for R&D and on
the specific terms of the loan to Usinor, upon which to determine whether this program is
providing benefits which constitute a subsidy within the meaning of the U.S.
countervailing duty law. We will seek additional information regarding these
programs before reaching final determinations.
Negative Determination of Critical Circumstances
Counsel for Bethlehem Steel Corporation and counsel for the Five alleged that imports of
all steel products under investigation present "critical circumstances." Under section
703(e)(1) of the Act, critical circumstances exist when the alleged subsidy is inconsistent
with the Subsidies Code of the General Agreement on Tariffs and Trade and "there have
been massive imports of the class or kind of merchandise which is the subject of the
investigation over a relatively short period."
Since these investigations were initiated, U.S. imports of carbon steel structural shapes
from France amounted to 608 net tons in February, 1,401 net tons in March, and 3,266
net tons in April, the most recent month for which import statistics are available. U.S.
imports of hot-rolled carbon steel sheet and strip were 24,256 net tons in February,
10,423 net tons in March, and 930 net tons in April. U.S. imports of cold-rolled carbon
steel sheet and strip amounted to 9,558 net tons in February, 7,630 net tons in March,
and 6,082 net tons in April.
In the context of this industry, these products have not recently been massively
imported from France over a relatively short period of time. Therefore, critical
circumstances do not exist for carbon steel structural shapes, hot-rolled carbon steel
sheet and strip, and cold-rolled carbon steel sheet and strip.
Verification
In accordance with section 776(a) of the Act, we will verify all the information used in
making our final determinations.
Suspension of Liquidation
In accordance with section 703 of the Act, we are directing the U.S. Customs Service to
suspend liquidation of all entries of carbon steel structural shapes, hot-rolled carbon steel
sheet and strip, and cold-rolled carbon steel sheet and strip which are entered, or
withdrawn from warehouse, for consumption, on or after the date of publication of this
notice in the Federal Register, and to require a cash deposit or bond, for each such entry
of the merchandise in the amounts indicated below:
Manufacturer/Producer/Exporter and Ad Valorem Rate
Sacilor--30.029 percent
Usinor--20.097 percent
All Others--30.029 percent
This suspension will remain in effect until further notice.
ITC Notification
In accordance with Section 703(f) of the Act, we will notify the ITC of our determinations.
In addition, we are making available to the ITC all nonprivileged and nonconfidential
information relating to these investigations. We will allow the ITC access to all privileged
and confidential information in our files, provided the ITC confirms that it will not
disclose such information, either publicly or under an administrative protective order,
without the written consent of the Deputy Assistant Secretary for Import Administration.
Public Comment
In accordance with § 355.35 of the Commerce Department Regulations, if requested, we
will hold a public hearing to afford interested parties an opportunity to comment on these
preliminary determinations at 10:00 a.m. on July 12, 1982 at the U.S. Department of
Commerce, Room 6802, 14th Street and Constitution Avenue, NW., Washington, D.C.
20230. Individuals who wish to participate in the hearing must submit a request to the
Deputy Assistant Secretary for Import Administration, Room 3099B, at the above
address within ten days of this notice's publication. Requests should contain: (1) The
party's name, address, and telephone number; (2) the number of participants; (3) the
reasons for attending; and (4) a list of the issues to be discussed. In addition, prehearing
briefs must be submitted to the Deputy Assistant Secretary by July 6, 1982. Oral
presentations will be limited to issues raised in the briefs. All written views should be filed
in accordance with 19 CFR 355.34, on or before July 19, 1982 at the above address and in
at least ten copies.
Gary N. Horlick,
Deputy Assistant Secretary for Import Administration.
June 10, 1982.
[FR Doc. 82-16247 Filed 6-14-82; 9:30 am]
BILLING CODE 3510-25-M